Everything you need to know about loan types
What's the story
Navigating through loans can be a daunting task, especially for beginners in India. With a plethora of options available, knowing the right loan for your needs is essential. This guide aims to simplify the process by providing insights into different types of loans, their benefits, and how to choose wisely. Whether you're looking for personal finance or planning a major purchase, understanding these basics can help you make informed decisions.
#1
Personal loans: A quick overview
Personal loans are unsecured loans that can be used for anything, from medical emergencies to travel. They usually have higher interest rates than secured loans, but the processing is quick and requires minimal documentation. The loan amount can range from ₹50,000 to ₹20 lakh, depending on your income and credit score. Repayment periods typically range from one to five years.
#2
Home loans: Investing in property
Home loans are specifically meant for buying or constructing a house. They come with lower interest rates than personal loans because they are secured against the property. The amount you can borrow usually ranges from ₹1 lakh to ₹10 crore, and the repayment tenure can go up to 30 years. However, you will have to pay processing fees and insurance premiums.
#3
Education loans: Funding your studies
Education loans help you pay for higher studies in India or abroad. These loans cover tuition fees, accommodation costs, and other related expenses. They are offered at lower interest rates with flexible repayment options that start after the completion of your course. The amount sanctioned usually ranges between ₹10,000 and ₹20 lakh depending on the institution's reputation.
#4
Car loans: Financing your vehicle purchase
Car loans are meant for buying new or used vehicles. They are secured against the car itself, which is why they come with lower interest rates than unsecured personal loans. The amount you can borrow usually ranges from ₹1 lakh to ₹1 crore depending on your income level and credit score. Repayment tenures typically range from one to seven years.